Christmas has come early for 152,000 people who have (or had) a personal loan with Northern Rock. These borrowers – most of whom held a mortgage with the bank – will each receive a windfall averaging £1,775 because of a paperwork glitch, even though no one is said to have lost out financially and nobody has complained. And the taxpayer is picking up the £270m bill because the error happened when Northern Rock was in public ownership.

What happened? As George Osborne explained to the Commons this week, some customers with certain types of loan were not given all the information in their statements they were entitled to by law. "As a result, interest payments on these loans are not legally enforceable," he said.

Basically, the statements failed to include the original amount borrowed. The Consumer Credit Act requires such statements to contain the sum borrowed, plus the opening and closing balance. Borrowers are not liable for interest relating to a period when a lender has not provided the information.

Who is affected? This involves people with loans (mainly unsecured) of less than £25,000. In some cases, these loans have been paid off. It is thought at least two-thirds of those affected took out Northern Rock's now-notorious "Together" mortgage, which was withdrawn from sale in early 2008. This allowed you to borrow up to 125% of a property's value, and was a traditional mortgage with an unsecured personal loan bolted on – which is the relevant part. In addition, some people who took out a personal loan secured against their property will also be getting a windfall. The £270m figure covers the amount of interest paid by customers from October 2009 until now.

How do I know if I'm affected? Northern Rock Asset Management (NRAM), the part that remains nationalised, has sent letters to all existing NRAM customers it believes could be affected by this issue. Most, if not all, of these should have arrived by now. It is also writing to those people whose loan has ended or is no longer with NRAM.

How will the windfalls be paid? The majority of people will not receive cash, but their loan account balance will be "corrected" to reverse the consequences of them being charged interest during the period when the paperwork did not meet the legal requirements. If the current balance is £15,000, it would, using the average of £1,775, be reduced to £13,225. Repayments stay the same, meaning you will pay off the loan earlier. If the loan has already been paid off – this may affect up to 45,000 people – you will get a cash refund.

When will I get the money? The letters sent out this week state: "At this stage we cannot give you specific details about when we will correct your account balance, if required. We are currently assessing the full impact on your loan and will write to you again in the next eight weeks."

Where can I find out more? For general queries, call NRAM on 0845 609 9626 or visit nram.co.uk.